IMRAN MOHAMMED ANWAR AHMED SHAIKH,MALAD WEST MUMBAI vs. INCOME TAX OFFICER, BANDRA EAST, MUMBAI

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ITA 5491/MUM/2024Status: DisposedITAT Mumbai20 January 2025AY 2014-2015Bench: MS. KAVITHA RAJAGOPAL (Judicial Member), SMT. RENU JAUHRI (Accountant Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal due to the assessee's medical emergency and financial distress. On merits, the Tribunal restored the matter to the AO for fresh examination, directing the assessee to provide documents and comply with the AO's directions.

What were the facts?

The assessee filed an appeal against the CIT(A)'s ex-parte order which dismissed his appeal for non-compliance. The assessee had purchased two plots of land, and the AO made an addition under Section 56(2)(vii)(b) due to the difference between market value and agreement value.

What were the issues?

Whether the delay in filing the appeal should be condoned, and whether the addition made by the AO under Section 56(2)(vii)(b) is justified, especially when the property was purchased by the assessee's firm and not in his individual capacity.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 56(2)(vii)(b),Section 250

AI-generated summary — verify with the full judgment below

Before: MS. KAVITHA RAJAGOPAL & SMT. RENU JAUHRI

For Appellant: Mr. Yogesh Sharma
For Respondent: Shri Mahesh Pamnani
Hearing: 14.01.2025Pronounced: 20.01.2025

Assessee by : Mr. Yogesh Sharma Revenue by : Shri Mahesh Pamnani Date of Hearing 14.01.2025 Date of Pronouncement 20.01.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 26.12.2022 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2014-15.

2.

The assessee has raised following grounds of appeal:

1. Notice u/s 143(2) dated 22-08-15 was issued and served to the assesse i.e. Imran Mohammed Anwar Ahmed Shaikh. Assessee is a partner in M/S. Ram Raheem Builder & Developers.

A.Y. 2014-15 Imran Mohammed Anwar Ahmed Shaikh 2. During the assessment proceeding assessing officer found that assessee purchase the 2 property CTS no. 2672 & 2673 and there is a difference in market value and agreement value. The assessing officer invoked the provision u/s 56(2)(vii) (b) of IT act and made the addition of Rs.67,93,500/- & Rs.97,83,000/- respectively while assessing his total income.

3. However these properties were not purchased by the assesee. The property was purchase by the firm in which he is a Partner. The property i.e. land was purchased in the name of Partnership firm i.e. M/s. Ram Raheem Builder & Developer. Purchase agreement was made and stamp duty was paid in the name of M/s. Ram Raheem Builder & Developer. The payment was made from the bank accounts of M/s. Ram Raheem Builder & Developer to the seller. Assessee is only a signatory to the agreement on behalf of M/s. Ram Raheem Builder & Developer. Stamp duty and registration fees receipts were in the name of M/s. Ram Raheem Builder & Developer. Relevance documents attached for your records.

4.

While passing the order the assessing officer not considered the fact that assessee neither purchased the property nor the owner of the same. All the documents related to property was in the name of M/s. Ram Raheem Builder & Developer, a partnership firm which is legal entity and assessable to tax under the provision of the act in its own capacity.

5.

A rectification letter dated 14-01-19 explaining all the fact of ownership along with documents was submitted to assessing officer - 30(1)(5). 6. "The appellant prays that the addition made by assessing officer which is confirmed by CIT (A), Income Tax of Rs.1,65,76,500/- in respect of property be deleted”

3.

Brief facts of the case are that the assessee had filed return declaring income of Rs. 3,91,870/- on 16.01.2015. The case was selected for scrutiny. It was noticed by the Ld. AO that during FY 2013-14, the assessee had purchased two portions of land for which there was difference in the stamp value and the agreement value as under: Survey no. 223 CTS No. 2672 Survey No. 223 CTS 2673 Market Value Rs. 1,15,43,500 Market Value Rs. 1,27,83,000/- Agreement Value Rs. 46,50,00/- Agreement Value Rs. 30,00,00/- Difference Rs. 67,93,500/- Difference Rs. 97,83,000/- 4. Accordingly, Ld. AO invoked provisions of section 56(2)(vii)(b) of the Act and made an addition of Rs. 1,65,76,500/- on account of above difference. Since A.Y. 2014-15 Imran Mohammed Anwar Ahmed Shaikh the assessee was unable to furnish the documents in support of his claim that the partnership firm M/s. Ram Rahim Vendor and Developers was the purchaser and he had merely signed the agreement in his capacity as partner.

5. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A). Ld. CIT(A) issued three notices on the registered email of the assessee. Since no compliance was made by the assessee, Ld. CIT(A) dismissed the appeal of the assessee exparte vide order dated 26.12.2022. Aggrieved with order of the Ld. CIT(A), the assessee is in appeal before us.

6.

At the outset, it is noticed that the appeal has been filed with a delay of 603 days. The assessee has filed an affidavit explaining that the order u/s 250 was received by him on 26.12.2022 and the due date for filing appeal against it was 24.02.2023. However, in the year 2023, he suffered from medical emergency due to which his health deteriorated. Consequently, he came under financial distress and was not in a position to take the burden of legal and professional fees. Medical documents in support of this claim have also been filed by the assessee. In view of the circumstances explained by the assessee, we hold that there was a reasonable cause and therefore condone the delay in filing of appeal.

A.Y. 2014-15 Imran Mohammed Anwar Ahmed Shaikh 7. On merits, the Ld. AR has filed a copy of conveyance deed in respect of the properties as well as a copy of the partnership deed in order to demonstrate that these were purchased by the firm and not by him in his individual capacity. Since none of these documents were placed before Ld. CIT(A) or Ld. AO, we deem it appropriate to restore the matter to the file of Ld. AO for a fresh examination of the issue in the light of these documents after giving due opportunity to the assessee. The assessee is also directed to make requisite compliance before Ld.AO.

8.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 20.01.2025.

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